Biogas: the economics?

Biogas screens as a relatively expensive source of energy. Our project model requires $20/mcfe gas, a $50/ton CO2 price and a $50/ton tipping fee, in order to make a 10% unlevered return on a $430/Tpa plant.

The economics are most sensitive to tipping fees, which are often imposed by regulators, to incentivize biogas projects at more competitive gas and power prices: an expensive tax on consumers, but a kingmaker for biogas projects. Without tipping fees, it would require c$1,500/ton CO2 prices before biogas was cost-competitive.

The aim of our model is to simplify the economics of an anaerobic digestion plant, producing biogas from food and agricultural waste that would otherwise have ended up in landfill. Assumptions can be flexed in rows 5-35. Explanatory notes around costs and economics are provided in the ‘Notes’ tab.

Copyright: Thunder Said Energy, 2022.